You are here: Home » Companies » News » Telecom
Business Standard

Reliance AGM 2018: No tariff cuts as Jio shifts focus to broadband services

Analysts are not surprised at the target given the potential and Reliance Jio's fibre presence

Romita Majumdar & Ram Prasad Sahu  |  Mumbai 

Nita ambani, Mukesh Ambani
Nita and Mukesh Ambani at the RIL AGM in Mumbai | Photo: Kamlesh Pednekar

Reliance Industries’ (RIL) 41st annual general meeting saw the entire conversation centred around the disruption Jio was going to cause this time around. While telecom players heaved a sigh of relief as there were no further tariff cuts, the action shifted to the fixed line broadband services. RIL’s chairman Mukesh Ambani announced the launch of Jio’s fibre to home or fixed line broadband services called as well as new offers for the JioPhone customers. Following feedback to the initial registration, the company, which will launch the service (Jio GigaFiber) from August 15, will take a call on where the services will start rolling out first.

“Your company has already invested over Rs 2,500 billion for creating state-of-the-art digital infrastructure to provide mobile and broadband connectivity across the country, with the largest fibre footprint. We will now extend this fibre connectivity to homes, merchants, small and medium enterprises and large enterprises simultaneously across 1,100 cities to offer the most advanced fibre-based broadband connectivity solutions,” said Ambani.

ALSO READ: JioPhone 2 vs JioPhone: How Reliance Jio's 4G VoLTE feature phones stack up

The wired broadband arm, has already started offering what they claim to be ‘ultra-high-speed’ fibre-to-the-home (FTTH) broadband connections with 1.1 terabytes (TB) of free data at a speed of 100 megabits per second (mbps) in select markets in the country. The company says it has rolled out 300,000 kilometres of optical fibre network in India and has a target of crossing 50 million households.

ALSO READ: Mukesh Ambani announces high-speed broadband, Jio Phone 2 with WhatsApp, FB

Analysts are not surprised at the target given the potential and Reliance Jio’s fibre presence. The number of wireline broadband subscribers is pegged at just 18 million in a total of 420 million broadband subscribers, a penetration of less than 10 per cent of the households in the country. Similarly, there are 68 million DTH subscribers, indicating a household penetration of less than 30 per cent. “The small base, along with rapidly increasing content, and improving bandwidth, translate into good growth potential for these services, especially fixedline broadband, says Harsh Jagnani, sector head & vice-president – Corporate Ratings, ICRA.

ALSO READ: Broadband stocks fall as RIL announces launch of JioGigaFibre

The launch of the home broadband services is expected to intensify competition for both the direct-to-home as well as cable broadband providers. Jagnani of ICRA said, “As was the case in the wireless telephony services, the entry of Reliance Jio is expected to exert downward pressure on pricing. This is especially the case in the home broadband industry, which has numerous smaller players who would find it difficult to compete in an environment of intense competition and lower pricing power.”

It is not surprising then that cable and broadband stocks were among the biggest losers in trade on Thursday. While Hathway Cable Datacom topped the list of losers falling 15.81 per cent (down 18 per cent intraday), Den Networks slipped 10.13 per cent.

ALSO READ: RIL to create hybrid online-to-offline retail platform: Ambani at AGM 2018

While the pricing would be attractive in the initial phase, analysts believe that as was the case in the mobile services, they are expected to stabilise after a few quarters. Says Mayuresh Joshi, Fund Manager, Angel Broking, “The pricing will have to be kept competitive because the investment made and the need to generate adequate return on investment. Too low a pricing would mean the returns get pushed out, which will not make business sense.” Given that for the top broadband players average revenue per user is Rs 650 per month, pricing for JioGigaFiber is expected to be around the Rs 500 mark, say analysts.

The company announced that the second phase of their 4G feature phone JioPhone 2 will cost Rs 2,999. Also starting July 21, users can exchange their existing feature phone and get a brand new JioPhone (existing model only) for an effective entry cost of just Rs 501.

“Even after serving the needs of our 215-plus million customers, the capacity utilisation of the Jio network is less than 20 per cent. This means, we can multiply our customer base without additional investment,” said Ambani addressing the shareholders.

ALSO READ: Reliance to deliver natural gas from KG-D6 project by 2020: Mukesh Ambani

Additionally, the company is rolling out JioPhone specific versions of popular apps like Youtube, Whatsapp and Facebook on public demand. Analysts see this as a move to attract the more digitally savvy and aspirational segment within the lower budget bracket while also helping to push more content consumption.

“With the range of services introduced, Jio is placing itself somewhere between where Android and Apple stand, wherein they can use their software and hardware ecosystems to push consumption and gather usage based data that may be monetised,” said Niel Shah, Research Director Counterpoint Research.

ALSO READ: RIL 41st Annual General Meeting today: Key announcements of last 3 editions

The fibre services will be targeted towards a whole range of entertainment and home services from the Jio portfolio, including JioTV (needs a Jio Set top box and Jio remote), gaming and digital shopping as well as connected Internet of Things devices.

Rajan S Mathews, director general, Cellular Operators Association of India, said, “The move brings the much needed integration between fixed and mobile service offerings across the country. Moreover, it will encourage other players in the market to roll out their FTTH technology faster.”

Broadbasing disruption

JioGigaFiber

  • To launch from August 15
  • To reach over 50 mn households
  • Expected pricing to be around Rs 500

JioPhone 2

  • To come at a price point of Rs 2,999
  • JioPhone customers can exchange for Rs 501
  • No more tariff cuts announced


With Inputs from Urvi Malvaniya

First Published: Fri, July 06 2018. 00:39 IST